Traditional pay TV providers are still seeing their subscriber bases shrink at accelerated rates but Charter, which has weathered the storm better than most, predicts a slowdown.
Charter CEO Tom Rutledge spoke with CNBC’s David Faber about his company’s video business and how it remains a value piece of the business despite industry-wide pressure.
“We’re the best of the worst,” he joked, referring to his company’s 121,000 video subscriber losses in the third quarter, which is still fairly low relative to what similar-sized competitors like Comcast and DirecTV are experiencing.
“It’s a problem business in the sense that it’s a business in transition. The cost of video has gotten really high, our wholesale cost is really high, the rates we pay to carry all of the products,” he told CNBC’s David Faber. “And it’s difficult from a pricing perspective to create value for a lot of customers. On the other hand, it’s still the best product out there from a video perspective.”
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Rutledge claimed that the combined cost of all the available streaming products is higher than what most subscribers pay for a traditional pay TV bundle.
“I think that it’s still a business that we need to be in, I think it’s a value to our customers, most of our customers still subscribe to video and I think the rate of loss in the bundle will probably slow,” he said, explaining that live sports and cable news still make traditional video packages appealing to customers.
During the third quarter, Charter raised its video revenue to approximately $4.5 billion, up 6.7% year over year, thanks in part to promotional rate step-ups and video rate adjustments that were partly offset by a higher mix of lower priced video packages. Charter has been willing to put subscribers onto lower cost streaming video plans, which has helped amass more than 10 million customers who strictly stream video from the company.
“We think there’s lots of opportunity for us to continue to change the video model and to take advantage of our relationship with customers and to make the video model more efficient for programmers and for operators and to bring value back into television,” said Rutledge during Charter’s most recent earnings call.